New Capital Markets Regulatory Framework

Author:Mr Gonzalo Anaya

The recently enacted Capital Markets Law (law 26.831) is the most substantial change to the capital markets regulation since 1968.

It was enacted in order to promote capital markets development in an equitable, efficient and transparent way, protecting the interests of the public investors, minimizing systemic risk and promoting healthy competition.

In order to achieve this aim, the mentioned law expressly states in section 1 that its main objectives and core principles are:

  1. To promote the participation of small investors, labor unions, associations and chambers of commerce, professional organizations and all public savings institutions, favoring especially mechanisms that promote domestic savings;

  2. To strengthen protection and prevention mechanisms that avoids abuse against small investors;

  3. To encourage the creation of a federally integrated capital market, through the interconnection of computer systems from different areas of negotiation, with the highest standards of technology; and

  4. To promote the simplification of trading for users and thus achieve greater liquidity and competitiveness.

    The enactment of the law 26.831 abrogated any other provision currently in force and eliminated the self-regulation system that used to exist. Currently, any individual that wants to operate in the market must register previously at the National Securities Commission, organism who exercises direct and immediate supervision over the markets.

    It must be noted that some of the modifications introduced by the new law reflect the legislature's intention to adapt local regulation, attending to the evolution of corporate law. Among other features it must be highlighted that the law establishes:

  5. The possibility of the board of directors to meet in any place in the country (section 7);

  6. The validity of non-face to face board meetings (section 11);

  7. The possibility of the board, in exceptional circumstances, to make decisions without the required quorum, even unilaterally but ad referendum of what is decided at the next meeting of the board (section 12);

  8. The lack of effect of the non-registered shareholders agreements (section 99); and

  9. Additional information that the summary of the financial or annual report ("memoria") must contain in order to provide full and clear information that enables shareholders to duly understand the financial statements of the company (section 60).

    On the 1st of August the Government finally enacted the expected Decree...

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